A strong spring selling season after a harsh winter helped bolster sales for home-improvement supplies, but the rebound wasn’t strong enough to prevent Lowe’s from trimming its full-year financial targets.
The guidance cut was a surprise, and perhaps suggests rival Home Depot (HD) has captured more market share than expected. Lowe’s now sees full-year sales rising about 4.5%, with same-store sales up about 3.5%. Those targets still suggest healthy growth and indicate consumers are opening up their wallets for products for their homes, but the guidance is lower than what Lowe’s (LOW) expected in May.
“Our year-to-date sales performance, together with our previous assumptions for the second half of 2014, result in a modest reduction to our sales outlook for the year,” Lowe’s Chief Executive Robert Niblock said in a statement.
Home Depot and Lowe’s have reported stronger sales the past few years, bolstered by a recovering housing market. But Lowe’s has consistently underperformed its larger rival in recent years and that trend continued in the latest quarter. Lowe’s total sales jumped 5.7% to $16.6 billion, while same-store sales increased 4.4%. Home Depot’s U.S. Same-store sales leapt 6.4% in the latest quarter.
Both are seeing stronger sales for the full year, potentially aided by easing lending standards and a pickup in loan demand that can boost sales as customers tap into credit to purchase homes — that can lead to renovations, people buying large items such as refrigerators, and it can mean professionals buy gear for their housing projects.
Overall, Lowe’s for the quarter ended Aug. 1 reported a profit of $1.04 billion, or $1.04 a share, up from $941 million, or 88 cents a share, a year ago. Analysts had expected a profit of $1.03 a share.
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